Wednesday, 28 March 2012

Bribe row puts spotlight on BEML's Tatra

Why has the army bought 7000 of these vehicles from BEML, over a quarter of a century, without insisting on full customisation and indigenisation?

by Ajai Shukla

Business Standard, 28th Mar 12

The electrifying revelation by Chief of Army Staff General V K Singh that he was offered a bribe of Rs 14 crore — apparently to sanction the purchase of 600 Kolos Tatra high-mobility vehicles — has highlighted a crucial question: How has the defence public sector undertaking, Bharat Earth Movers Limited (BEML), been supplying the army with what it considers a largely imported vehicle at an exorbitant price for a quarter of a century?

Since 1987, when BEML supplied the army with the first Tatra high-mobility vehicles that had been procured from Czechoslovakia, today 7,000 Tatra vehicles feature on the army’s inventory. Successive army chiefs cleared the purchase of repeated tranches of Tatra vehicles. But, in 2010, General V K Singh turned down a fresh procurement request, ordering instead a multi-vendor procurement of a suitable Indian vehicle.

Singh’s objections to the Tatra were threefold, explains a top-ranking army officer who plays a key role in equipment procurement. First, BEML had not indigenised production adequately. Almost 70 per cent of the Tatra was sourced from abroad. Second, despite BEML’s so-called ‘manufacture’ of the Tatra for decades, it remained a left-hand-drive vehicle that was unsuitable for Indian conditions. Third, Gen Singh believed BEML was making windfall profits on the Tatra, selling it to the army for about a crore rupees a vehicle, when it could be bought in Eastern Europe for half that cost.

“The Tatra was horrendously expensive. BEML was focused on maximising profits without even substantial indigenisation,” says a top procurement official of that time.

BEML chairman V R S Natarajan rejects charges of insufficient indigenisation and points out the purchase contract with the Tatra did not include transfer of technology (ToT). “We didn’t buy the technology for the Tatra. They are helping us indigenise without India paying for it… Despite that, the Tatra today is 60 per cent indigenous,” says Natarajan.

But top army officials, who are seeking a replacement for the Tatra, call that laughable. “In 25 years, BEML has not even bothered to modify it into a right-hand-drive vehicle; what indigenisation have they done?” asks a senior serving general.

Natarajan has an answer. “If the army wants to make it right-handed, we can do it. But they are not asking for that… The army is used to (the Tatra); they are driving it; and we are supplying it,” says the BEML chief.

Asked to confirm how much of the Tatra is built in India, the MoD’s joint secretary (land systems), Rashmi Verma, puts the figure at 45 per cent. But Natarajan dismissed her assessment. “If you ask her a specific question, she will ask information from me and then tell you. On her own, she might not know. But I know 100 per cent.”

With General Singh exasperated at BEML, he pushed for an alternative. Army records show the MoD cleared the procurement in mid-2010; by end-2010, a tender was floated for an Indian replacement for the Tatra. Four companies — Tata Motors; Ashok Leyland; Ural (India) Ltd; and BEML — fielded their high-mobility vehicles in trials, conducted through 2011. A winner is likely to be declared this year, say army sources.

For BEML, this signals the end of a series of lucrative repeat orders for the Tatra. All these years, the Tatra was not governed by the strict safeguards the Defence Procurement Procedure imposes on fresh procurements. The safeguards do not govern repeat orders for an “in service” vehicle. For such orders, the Master General of Ordnance, a lieutenant general in army headquarters, New Delhi, has the power to initiate a fresh purchase without clearance from the MoD.

But there still existed the possibility of one last lucrative order for the Tatra, before other domestic alternatives ended its long-running monopoly. Sources close to Gen Singh allege that this was the proposition for which he was offered Rs 14 crore.

23 comments:

Anonymous
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Lt Gen Tejinder Singh is connected to at least one upcoming politician.

Tejinder Singh, he writes, “operates in tandem” with a retired major and his son, “both of whom are well-known” to.........................................Home Minister P Chidambaram’s son Karthi Chidambaram.

Lt Gen Tejinder Singh is connected to at least one upcoming politician.

Tejinder Singh, he writes, “operates in tandem” with a retired major and his son, “both of whom are well-known” to.........................................Home Minister P Chidambaram’s son Karthi Chidambaram.

I believe that the system is now so rotten that we need to delete the existing and start afresh. Defence PSU and Ordnance Factories are meant to supply quality product at better cost and in quicker time frame o the Armed Forces. This is the sole rationale for their existence. In the instant case it transpires that BEML (a Defence PSU) was gold-plating the cost of TATRA trucks to benefit bureaucrats and techies of BEML. Similar was the case of Head of Ordnance Factories, who was caught taking huge bribes from foreign vendors.Nothing has happened in that case, nothing will happen to the culprits in the instant case. WHy because whole system is rotten. I am sure that if General VK Singh had accepted the bribe in September 2011, he would have gained immediate acceptance with MoD, his appeal for rectification of DoB would have been accepted by the Defence Minister (on advise of his Bureaucrats) and General VK Singh would have retired to take up Governorship of some state.Now he will retire but his terminal benefits will take their own time coming, his accounts and dealings will be probed by multiple agencies to ensure that either he is put in jail on false charges or develops a heart condition due to stress.

"How has the defence public sector undertaking, Bharat Earth Movers Limited (BEML), been supplying the army with what it considers a largely imported vehicle at an exorbitant price for a quarter of a century?"

How indeed! Well, that is how "indigenization" worked historically in India. Import a product, then make a few items at BEL, BEML and other DPSUs, put your name plate on it and sell it at a nice markup . Everyone is happy. The import lobby is happy, the arms dealers get their commissions, the politicos are happy, coz they can dole out jobs and other "welfare" and have a huge workforce at the DPSU, the commies are thrilled, they get a ready made large unionized govt workforce to mobilize and sit in dharnas and make a nuisance of themselves, and of course, for media and public relations, you can claim a 100% indigenous product! All this is done in such a way that the GSQR is tailored to ONE product or an arcane detail of no consequence on the basis of which you can reject all other competing products and of course, you will keep out competing guys from the private sector /wont subcontract to them, all in the name of "commanding heights", Defense reserved for PSU and "Self Reliance" or whatever mumbo jumbo.

BEML is historically notorious for it. OFB is another egregious case. They assembled the MAN trucks aka Shaktiman for 40 years and now assemble Ashok Leyland trucks. Whatever for. Why doesn't the army buy directly from AL and cut out the OFB middleman, whose sole purpose is to skim off margins and feed it's bloated work force and does a terrible job of even assembly?

How else can the T-72/T-90 get made in India for 40 more years? The Russians are not going to buy the T-90 anymore and they are going to replace their tank fleet with a new Merkava like design which will weigh 60 tons or more. The Army however will reject the Arjun and then insist on buying hundreds of T-90s when even the Russians are not going to buy any , on the grounds that Arjun is "overweight'. But oh, the new Russian tank which outweighs the Russians, if made assembled in India under license will suddenly become bantam weight and 100% indigenous to boot!

Ajai, it has been good to have you in there to explain our citizens the insight into military matters. otherwise normally the media coverage is tainted and its reception by a common man is very superficial and distorted. Probably,Indian Army needs more proactive and straighter media handling.

Antony is an idiot, he simply doesn't care about nations security, no gun, no ammo, no bullet how army gonna fight.. stupid govt blaming army chief to save its own face......height of ignorance..jaago India jaago

After reading your blog, I get three figures on the indigenization of the Tatra truck.

1. 70 % imported from a "top defence source"

2. 45% made in India as per MoD spokesman

3. 60% made in India as per BEML Chairman.

Which is the correct figure? Should you not do a final analysis?

Another factual in accuracy. I have stayed in Europe for quite some time. And i can tell you for sure that you cannot buy a 8X8 Tatra truck for Rs 50 Lakh(aprox 90,000 Euros). A 18 wheeler regular truck costs more than that, leave a 8X8 Tatra. A similar commercial Tatra would cost close to 250,000 Euros without military customization.

Please check truck prices in India. The new Tata 10 wheeler truck (forgot the new series name)cost close to 45 Lakhs, that too with 2 wheel drive.

DRDO,HAL,NAL,BHEML etc have not only been a drain on money but they have wasted enough resourses that were meant to keep the armed forces up todate. The domino effect has rippled where in pilots could not be trained, fighters like mig 21 were used as trainers...they got brandished, and the IAF left with no teeth....the managing directors/scientists ,etc of all these know that they are in a govt job, no one can kick them out, as long as the books are maintained....under disguise of indegenisation which we all want, the enemy also has started propganda that all those who have the bals to call a spade a spade and show the failurs of hal,nal ,drdo...are termed as touts...thus building momentum to even drain more money out of products that fly in the air, shoot at the enemy instead of filling blogs by photos of taxi trials

DG of Military Operations/Mech Inf - how... they were using these vehicles... with all the support and modifications... these people were not able to.... operate Arjun MBT... so they just purchase... these uncustamised vehicles and... leave it to rot... again buy... leave it to rot... without using them... since they stated... they are not able to do justice with Arjun MBT... with all the help... they were getting from indians... so what will be the case... with T-90's that... we bought... from russia... and those we made here... without getting the ToT done... T-90's are... paper tanks...

I must compliment you on bringing to light to the Aam Aadmi how the cream of the defence budget is skimmed off. Could you also delve into the anamolies of the sytem, where we have white elephants like Military Dairy Farms, the MES, Vehice Factory Jabalpur,DGOF manufacturing clothing, the system of financial management overly controlled by the CDA which only adds to delays and corruption, incidently the CDA person is not subject to the Army Act, besides the procdures and rules absolve them of all accountability in financial irregularities while they cooly skim off pecentages for clearing cheques from defence suppliers. The Navy is better managed in dealing with their financial budgets. Gen VK Singh should have pursued these right from day one instead of at this juncture but better late than never.

By joinng the loose ends of the strings, a larger picture comes out.General V K Singh blocks the Tatra deal. A retired Lt. General approaches to broker the deal. General V K singh scolds him & ask to leave. The retired Lt General happens to be close to an influential politician, who has been repeatedly accused of corruption. MOD does not extend the retirement date of the Army chief, because of this event.Frustrated army chief exposes the deal, to embarrass the govt & necessary action be taken on that Lt General.

Height of Indecisiveness! This recent expose by none other than the CoAS, highlights the fact that the civilian leadership of India is gripped by decision making paralysis. The ranks of the civilian institutions are filled with rotten apples. My fears are for my country being lead to ruin by such actions of our ruling party. The only capable leader ever produced by this ruling party was Indira Gandhi. The remaining Gandhi's are shamelessly trying to garner votes by cashing-in on the legacy of her name. They don't have an iota of experience which Indira had. But as times change, so do leaders, and the fate of nations. The trend of indecisiveness which Indian leadership and intelligence chiefs has exhibited in its relationship with its adversarial neighbors, makes me quote the famous speech by General McArthur in the US Congress during the Korean War "The objective of any war is victory." 'Appeasement will only beget more bloodshed later'. How true those statements made by a military leader stand today with respect to its adversaries. He said, "the occupants of White House are only temporary", while the "oath taken by the soldier is to its country and its constitution permanently". I wish each aspiring Indian political candidate study such military history before embarking on their civilian roles, and understand their duty is to the nation and its people first. Unfortunately most of our existing politicians don't even have the proper credentials, instead they have rap-sheet credentials, not to speak of the miserable slum-dwelling civilians who keep voting for such douche-bags time and again. The problem hence is, the rot is within us, in our civilian mentality. There 'is' no national identity and pride. The only identity is that of scams, corruption, and lawlessness, which manifests in all sections of society and is not limited to the top echelons.